Delhi HC quashes adjudication order due to SCN uploaded without petitioner's knowledge, violating natural justice

Delhi HC set aside an adjudication order where SCN was uploaded on Additional Notices Tab without petitioner's knowledge, violating natural justice principles. The court noted that no personal hearing was provided and no reply was filed due to lack of notice. Following precedent in Neelgiri Machinery case involving similar circumstances, HC remanded the matter for fresh consideration. The court acknowledged that department modified the portal post-January 2024 to ensure SCN visibility, but since this case involved September 2023 SCN, petitioner was granted fresh hearing with proper opportunity to respond.

---

---

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter were:

• Whether the impugned Notification No. 9/2023-Central Tax and Notification No. 56/2023-Central Tax issued under Section 168A of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017) are valid, particularly regarding the procedural compliance and the requirement of prior recommendation by the GST Council before extending the time limit for adjudication of show cause notices and passing orders under Section 73 of the CGST Act.
• Whether the impugned show cause notice (SCN) dated 25th September, 2023 and the consequent order dated 30th December, 2023 passed under Section 73 of the CGST Act were validly issued and adjudicated, especially considering the procedural aspects of service and opportunity of personal hearing to the Petitioner.
• The effect of the procedural irregularities, if any, in the issuance and adjudication of the SCN and orders, including the manner of uploading SCNs on the GST portal under the 'Additional Notices Tab' and the absence of personal hearings leading to ex-parte orders.
• The appropriate relief and directions to be granted to the Petitioner in light of the above issues and pending adjudications, including whether the Petitioner should be afforded an opportunity to file replies and be heard.
• The interplay between the pending challenges before various High Courts and the Supreme Court regarding the validity of the impugned notifications and their impact on the present proceedings.

2. ISSUE-WISE DETAILED ANALYSIS

Validity of the Impugned Notifications under Section 168A of the CGST Act

Relevant Legal Framework and Precedents: Section 168A of the CGST Act empowers the Central Government to extend the time limit for adjudication of show cause notices and passing orders under Sections 73 and 74 of the Act, subject to the prior recommendation of the GST Council. The notifications challenged, namely Notification No. 9/2023 and Notification No. 56/2023, purportedly extend such time limits.

Court's Interpretation and Reasoning: The Court acknowledged that the validity of these notifications is a subject of judicial divergence across various High Courts. The Allahabad and Patna High Courts upheld the notifications, whereas the Guwahati High Court quashed Notification No. 56/2023. The Telangana High Court expressed reservations about Notification No. 56/2023, and the matter is presently sub judice before the Supreme Court in SLP No. 4240/2025.

Treatment of Competing Arguments: The Petitioner challenged the notifications on procedural grounds, particularly the absence of the GST Council's prior recommendation before issuance, as mandated by Section 168A. The Department defended the notifications as valid and issued in accordance with statutory requirements.

Conclusions: Given the pendency of the matter before the Supreme Court and divergent High Court views, this Court refrained from expressing a definitive opinion on the validity of the notifications. It held that the challenge to the impugned notifications would be subject to the Supreme Court's final adjudication.

Validity and Procedural Fairness in Issuance and Adjudication of Show Cause Notice and Order

Relevant Legal Framework and Precedents: Section 73 of the CGST Act governs the adjudication of cases involving tax demands. Principles of natural justice require that a show cause notice be properly served and that the recipient be given an opportunity of personal hearing before any order is passed. The Court relied on precedents including W.P.(C) 13727/2024 (Neelgiri Machinery) and cases such as M/s ACE Cardiopathy Solutions Pvt. Ltd. v. Union of India and Kamla Vohra v. Sales Tax Officer, which emphasize the necessity of fair opportunity to reply and personal hearing.

Court's Interpretation and Reasoning: The Court found that the impugned SCN dated 25th September, 2023 was uploaded under the 'Additional Notices Tab' on the GST portal, a location not readily accessible or visible to the Petitioner, resulting in non-receipt of proper notice. Consequently, the Petitioner was deprived of the opportunity to file a reply or avail personal hearing. The adjudication order dated 30th December, 2023 was passed ex-parte, without affording the Petitioner a hearing.

Key Evidence and Findings: The Court noted that post-January 2024, the Department had taken steps to improve the portal's interface to ensure better visibility of SCNs. However, since the SCN in question was issued in September 2023, prior to these changes, the Petitioner was disadvantaged.

Application of Law to Facts: Applying the principles of natural justice and the precedents cited, the Court held that the impugned order was liable to be set aside and the matter remanded for fresh adjudication after providing the Petitioner an opportunity to file replies and be heard personally.

Treatment of Competing Arguments: While the Department argued that the SCN was issued in accordance with procedure, the Court found the manner of service inadequate and prejudicial to the Petitioner's rights. The Court emphasized that mere uploading on a less accessible tab does not constitute valid service.

Conclusions: The Court set aside the impugned demand orders and directed that the Petitioner be given thirty days to file replies to the SCNs. Further, the hearing notices were to be sent not only by uploading on the portal but also by e-mail and phone communication to ensure actual notice. The adjudicating authority was directed to consider the matter afresh on merits after personal hearing.

Interim Relief and Effect of Pending Supreme Court Proceedings

Relevant Legal Framework and Precedents: The Court recognized the principle of judicial discipline and the binding effect of Supreme Court decisions on subordinate courts. The Punjab and Haryana High Court's order directing interim relief and deferring to the Supreme Court's decision in SLP No. 4240/2025 was noted.

Court's Interpretation and Reasoning: The Court acknowledged that the ultimate question regarding the validity of the impugned notifications is pending before the Supreme Court. It therefore refrained from deciding on that issue and held that any order passed by the adjudicating authority shall be subject to the Supreme Court's final decision.

Conclusions: The Court disposed of the petition with directions for fresh adjudication while expressly leaving open the question of the notifications' validity pending Supreme Court determination.

3. SIGNIFICANT HOLDINGS

"Since the challenge to the above mentioned notifications is presently under consideration before the Supreme Court in S.L.P No 4240/2025 ... the challenge made by the Petitioner to the impugned notification in the present proceedings shall also be subject to the outcome of the decision of the Supreme Court."

"The impugned order dated 30th December, 2023 was passed without providing the Petitioner a personal hearing and in the absence of a reply on behalf of the Petitioner ... The impugned demand orders dated 23rd April, 2024 and 5th December, 2023 are accordingly set aside."

"The show cause notices shall be adjudicated in accordance with law. The hearing notices shall now not be merely uploaded on the portal but shall also be e-mailed to the Petitioner and upon the hearing notice being received, the Petitioner would appear before the Department and make its submissions."

"Let the entire matter be considered afresh and an order be passed on merits after duly considering the reply and the submissions made by the Petitioner in the personal hearing."

Core principles established include:

• The necessity of strict compliance with procedural requirements under Section 168A of the CGST Act for extension notifications, subject to judicial scrutiny and pending Supreme Court adjudication.
• The fundamental requirement of fair opportunity to be heard in tax adjudication proceedings, including proper service of show cause notices and personal hearings.
• The inadmissibility of ex-parte orders where procedural fairness is compromised, especially due to inadequate notice.
• The obligation on tax authorities to ensure effective communication of notices, including electronic mail and accessible portal interfaces.
• The principle of judicial discipline requiring lower courts to await the Supreme Court's ruling on contentious legal questions before expressing final opinions.

---